RBL Bank Share Price Hits 5-Year High on $3 Billion Emirates NBD Investment
RBL Bank Ltd. share price rose to the highest level since February 2020 in Monday’s session, despite disappointing results for the September quarter, as the $3 billion-deal with Emirates NBD boosted sentiment for the stock.
Emirates NBD to Acquire 60% Stake in RBL Bank
The second largest bank of Dubai will buy a 60% stake in the Indian private bank through a preferential allotment. For the investment, up to 41.6 crore shares at Rs 280 apiece will get allotted to Emirates NBD on a preferential basis. An open offer is a consequence of preferential allotment, said Chief Executive Officer R Subramaniakumar in the second-quarter conference call on Sunday.
The open offer will take place after all regulatory approvals. Preferential placement will be followed 15 days post open offer, Subramaniakumar said. Post the investment, RBL Bank’s net worth will increase to Rs 42,000 crore, Subramaniakumar added.
Q2 Results: Net Profit Down 20%, Net Interest Income Down 4%
RBL Bank reported a 20% decline in net profit at Rs 178 crore, compared to Rs 222 crore in the same quarter last year. Net interest income also declined 4% to Rs 1551 crore, compared to Rs 1615 crore in the same quarter last year.
Other income, however, rose 1% to Rs 932 crore, compared to Rs 927 crore in the same quarter last year. Provisions declined 19% to Rs 499 crore, compared to Rs 618 crore in the same quarter last year.
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RBL Bank Share Price Surges 5.14% to Rs 314.90
RBL Bank share price rose 5.14% to Rs 314.90 apiece, the highest level since February 27, 2020. It was trading 2.5% higher at Rs 307.40 apiece as of 9:22 a.m., as compared to a 0.78% advance in the NSE Nifty 50 index.
The stock has advanced 74.9% in 12 months and 95.73% on a year-to-date basis. Out of 23 analysts tracking the company, 13 maintain a ‘buy’ rating, five recommend a ‘hold’, and five suggest ‘sell’, according to Bloomberg data. The average 12-month consensus price target implies a downside of 0.8%.
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What’s Next for RBL Bank?
The deal is expected to conclude in April, and after that, RBL Bank will be a listed entity of Emirates NBD. The investment is expected to boost RBL Bank’s net worth and improve its financials.
However, the bank’s Q2 results were disappointing, and the stock’s valuation is already high. Investors should exercise caution and keep an eye on the bank’s future performance before making any investment decisions.
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